9911796707
TMI Blog2023 (12) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... Act) for Financial Year 2017-2018 corresponding to Assessment Year 2018-2019 despite reminders sent and for a direction to respondents to refund an admitted amount of Rs. 4,23,60,940/- plus interest thereon. 4. Mr. Gandhi states that after the petition was filed, petitioner received an amount of Rs. 4,23,60,940/- towards refund on 21st August 2023 but no interest has been paid. 5. Mr. Singh appearing for respondents states that the question of paying any interest does not arise because the Act does not provide for payment of any interest in cases of this nature. 6. Petitioner has been availing specified services as defined in clause (i) of Section 164 of the Finance Act, 2016 which came into force with effect from 1st April 2016. Section 164 of the Finance Act, 2016 provides in clause (i), unless the context otherwise requires - "specified service" means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government on this behalf. 7. The equalisation levy under Chapter VIII of the Finance Act, 2016 came to be introduced due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cution. 8. For Assessment Year 2018-2019, petitioner filed its statement of specified income originally on 26th June 2018 disclosing total consideration for specified services at Rs. 3,99,41,76,889/- and equalisation levy thereon at Rs. 23,96,50,668/-. After declaring total levy paid of Rs. 23,96,50,670/-, refund of Rs. 60/- was claimed which was later revised to Rs. 4,23,60,940/-. 9. Since 2022 emails were sent for processing payment of refund which, for some inexplicable reasons, was never paid and as noted earlier, was finally paid after this petition was filed. The issue that remains to be decided in this petition is whether petitioner was entitled to interest on the amount refunded. 10. As noted earlier, the stand of the Revenue is interest is not provided for refund of amounts deposited under the equalisation levy and, therefore, the question of payment of any interest does not arise. Mr. Gandhi, at the outset, submitted that Section 170 of the Finance Act, 2016 provides for every assessee, who fails to credit the equalisation levy or any part thereof as required under Section 166 to the account of the Central Government within the period specified in that section, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act, no interest would accrue. The Assessing Officer, while granting refund of the tax paid, refused to entertain the claim for interest. Appellant carried it to the Commissioner of Income Tax (Appeals) [CIT(A)] and later to Income Tax Appellate Tribunal (ITAT) and the matter finally reached the Apex Court. The Apex Court, after reproducing various provisions of the Act and recording the submissions of the parties, decided the question whether the resident/deductor is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Act. 12. We must keep in mind that even in that case, the stand of the Revenue was since there was no provision which provides for interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Act, no interest was payable. The same stand is taken before us also. 13. The Apex Court, in Tata Chemicals Ltd. (Supra), observed that the Tribunal and the High Court granted interest on the amount of tax deducted by the resident/deductor from the date of payment on the grounds that the Revenue for having retained the sum by way of tax has to compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-resident. The amount paid into the Government account in such cases, is no longer 'tax'. In view of this, no interest under section 244A is admissible on refunds to be granted in accordance with this Circular or on the refunds already granted in accordance with Circular No. 769." 34. What the deductor/ resident primarily contend is that, what has been deposited by him is a tax, may be for and on behalf of non-resident/ foreign company and when the beneficial circular provides for refund of tax to the deductor under certain circumstances, the refund of tax should carry interest. 35. The circular issued by Central Board of Direct Taxes ("the Board" for short) is binding on the department. Binding nature of the circular is explained by this Court in the case of UCO Bank v. CIT 237 ITR 889, wherein this Court has observed that the circulars issued by the Board in exercise of its powers under Section 119 of the Act would be binding on the income tax authorities even if they deviate from the provisions of the Act, so long as they seek to mitigate the rigour of a particular Section for the benefit of the assessee. Therefore, we cannot be taking exception to the reasoning and concl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/ deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company. 38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was Signature Not Verified issued by the appellate authority to refund the Digitally signed by RAJNI MUKHI same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the Revenue to refund such amount with interest inasmuch as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244-A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 6301 of 2011 vide order dated 26.2.2014, held that "Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no 2 [2014] 43 taxmann.com 240 express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. " 8. It will be apposite to re-produce paragraphs 37 and 38 of Tata Chemicals Ltd. (Supra) and the same reads as under : xxxxxxxxxxxxxxxxxxxxxx 9. In the present case, it is not in doubt that Petitioner was entitled to refund of Rs. 62,81,983/- which ought to have been processed and paid latest by 31st July 2021. The amount as stated in the affidavit-in-reply has been paid only on 26th May 2023. Consequently, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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